China's mobile game developers look for best markets

Although based in China and a maker of hit games, app developer Haypi has largely ignored its home market.

Although based in China and a maker of hit games, app developer Haypi has largely ignored its home market. Instead, the Chinese company's forte is building games for U.S. and European users.

"Our games don't have Chinese characteristics, but instead use European art styles," said Haypi CEO Ren Gang in an interview. In fact, the strong emphasis on European culture has left many users unaware that the company is Chinese. "A lot of users have mistakenly believed we are German."

Haypi is just one of the many Chinese mobile game developers in the country seeking to cash in on the popularity of smartphones and tablets by building mobile apps. But to make that cash, developers often have to choose between developing products for overseas markets and focusing on China, a country where app downloads are soaring, but where users are less accustomed to paying for them.

China is ranked second for number of downloads on Apple's App Store, right behind the U.S., according to analytics firm App Annie. The country has tripled the number of App Store downloads from a year ago.

But despite the high download count, Chinese users generally only download free content, rather than purchasing apps. This means the country generates an average of about US$0.03 per App Store download, when comparing gross revenue against total downloads. The U.S., in comparison, generates an average of US$0.28 per download, while Japan generates US$0.40.

"Credit card adoption in China is still extremely low, so app purchases are less," said Oliver Lo, chief marketing officer for App Annie. China also has a prevalence of pirated apps, where developers will copy an app and make it available for free, he added.

This has been part of the reason why app developer Haypi has focused on the U.S. and European markets, where users are more willing to pay for in-game purchases, according to Ren. The company's strategy has so far been a success, leading Haypi to produce two hit multiplayer online games for Apple's App Store that have ranked as top grossing products. About 70 percent of Haypi's users are from the U.S. and Europe.

"I think it's easier to make money overseas. There is still a lot of competition, but the market is also more regulated," he said. Haypi originally developed PC games for overseas markets starting in 2000, and avoided the Chinese market due to the rampant piracy in the country.